Anticompetitive Exclusion and the 'Inherently Suspect' Framework: The Viability of the Federal Trade Commission’s Analysis in Realcomp II
Wilson Sonsini Goodrich & Rosati
November 8, 2011
UC Davis Business Law Journal, Vol. 11, pp. 375-411, 2011
In recent years, the “inherently suspect” framework has emerged to the forefront of antitrust law. This Article examines the development and application of the “inherently suspect” framework antitrust from Justice Brennan’s first use of the term in White Motor Co. to its formulation in In re Mass. Board and Polygram Holding. Consistently applied to joint venture agreements which cause collusive anticompetitive effects, the framework creates an evidentiary presumption of anticompetitive effects without proof of market power. In the most recent use in Realcomp II v. FTC, however, the FTC advocated for an extension of the application of the “inherently suspect” framework to exclusionary conduct. Although the FTC’s opinion was affirmed, the Sixth Circuit did so under the full rule-of-reason analysis rather than the “inherently suspect” framework. The bounds of the “inherently suspect” framework thus remain an open question.
The “inherently suspect” framework has also been equated with the “quick look” analysis. Although the terms have been used interchangeably by various courts, the two terms refer to distinct and separate frameworks. While the “inherently suspect” framework presumes anticompetitive effects without a showing of market power, the “quick look” analysis requires proof of either market power or anticompetitive effects. Courts should be cautious in interchangeably using the terms as it could confuse evidentiary burdens.
Lastly, this paper examines the impetus behind the FTC's most recent advocacy to extend the “inherently suspect” framework. Realcomp, Princo, and the Revised Horizontal Merger Guidelines appear to be attempts to address the challenges of the “new economy.” In industries that compete on price and output only secondarily to innovation, the FTC seems to advocate that attempts to suppress innovation should be seen as an exercise of market power.
Number of Pages in PDF File: 37
Keywords: antitrust, exclusion, anticompetitive, realcomp, polygram, mass. board, princo, inherently suspect
Date posted: November 8, 2011
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